Not all communities find ways to save on health insurance costs

More than a year after the passage of historic legislation meant to empower local governments in taming their health care spending, the region's cities and towns have joined municipalities across the state in savings millions of dollars, but many could still do more - assuming they want to shift more costs to employees, a delicate prospect.

More than a year after the passage of historic legislation meant to empower local governments in taming their health care spending, the region's cities and towns have joined municipalities across the state in savings millions of dollars, but many could still do more - assuming they want to shift more costs to employees, a delicate prospect.

State-mandated reports, required of those cities and towns that didn't adopt the new law and obtained by the Daily News from the Executive Office of Administration and Finance, show that a number of local cities and towns could save hundreds of thousands of dollars of additional taxpayer money by lowering the portion they contribute to insurance premiums or by implementing the deductibles and higher co-pays of the coverage pool for state workers - the Group Insurance Commission, or GIC.

An extensive survey by the paper also shows many cities and towns still offer plans that don't carry a deductible; don't charge a co-pay for high-tech, costly scans like MRIs; and don't offer tiered out-of-pocket costs to encourage workers to use cheaper hospitals and doctors offering quality care. All state plans include a $250 deductible for individuals and a $750 deductible for families, and 10 of the 11 offerings feature tiering.

"My impression is that communities are going to do this in steps and not go all the way to the GIC level in one bite," said Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation, which pushed for the legislation after years of research and advocacy.

Also, if cities and towns have not cut services or laid off staff, the need for even further health savings might not be as pressing, Widmer said. There's also the need to weigh budget paring with the desire to treat employees fairly and attract quality talent - though higher-out-of-pocket expenses can lower premium costs for both employer and employee.

"I think the circumstances vary," Widmer said. "I think all of this is kind of a balancing act."

Signed by Gov. Deval Patrick in July 2011, the municipal health care act requires governing bodies like selectmen and city councils to take a vote if they want to change the design of health plans outside normal bargaining. They then have 30 days to negotiate with a committee of union representatives to decide whether to enter the GIC and use state health plans or make changes on their own. Special panels resolve gridlock but have been rarely required.

Locally, Weston and Hopedale had already struck deals with unions to join the GIC. Sudbury adopted the new law and followed suit. Of the remaining 18 cities and towns, just Framingham, Holliston, Milford and Southborough opted for the legislation, though many others have made changes in recent years or saw unions agree to concessions because of the move afoot statewide.

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Milford lowered health spending by nearly $1.5 million through the new law. Framingham had already trimmed $1.4 million annually when it followed suit, leading to an additional $2.4 million in savings. The law requires a quarter of first-year municipal savings to go to worker relief, and Framingham has set up a $640,000 pool for employees to draw from for co-pays in times of hardship.

Health care spending has gone from a 16 percent share of the budget to 14.5 percent in Framingham, with the town watching the GIC before potentially seeking further changes.

"We're hoping to get to 12 (percent)," said Mary Ellen Kelley, the town's chief financial officer. "We're really not done."

Among the 14 cities and towns that haven't adopted the law, Upton saved $37,000 by negotiating some out-of-pocket expenses, including co-pays for the first time ever on high-tech scans, outpatient surgeries and hospitalizations - some of the biggest cost drivers in health care. The town is likely to consider deductibles and tiering in future negotiations, Town Manager Blythe Robinson said.

Elsewhere, Natick has saved $1.1 million annually by negotiating higher-copays. But it told the state it could save $762,000 more, by introducing deductibles and providing a flat 75 percent of premiums, instead of 90 percent for individuals and 80 percent for families, some of the most generous contributions in the region.

Among the Daily News' other findings, from reports to the state comparing existing local plans to GIC offerings and from the paper's survey of the most heavily subscribed municipal plans:

n Two-thirds of cities and towns don't include deductibles in their plans or do so for just some of their offerings. Those that do have largely followed the GIC's lead of setting levels at $250 for individuals and $750 for families. In Medway, though, the amounts are $1,000 and $2,000, respectively. Hopkinton is also trying to get new employees on a plan with similar deductibles.

n Medway is listed as having saved as much as the GIC, along with just one other town - Franklin.

n Two-thirds of cities and towns carry plans that don't charge workers for high-tech scans, and several don't include co-pays for hospitalizations and outpatient surgeries.

n Mendon and Hopkinton had not turned in their potential cost-savings reports, despite the passing of a state deadline. From the remainder, Westborough could save $694,000 more; Hudson $320,000; Wayland $213,000; Northborough $198,000; Ashland $178,000; Upton $150,000; and Marlborough $106,000 - at least hypothetically.

n By law, cities and towns have to chip in at least 50 percent of the premium, but many contribute much more, potentially leading to higher costs. Among those not in the GIC, Ashland, Bellingham, Framingham, Hopkinton and Natick top the list with shares at 75 percent and above.

Finally, the era of $5 co-pays is largely over, apart from Hudson, which charges that amount for visits to primary care doctors and specialists under the town's Blue Cross HMO plan. While Hudson doesn't have co-pays for hospitalizations, outpatient surgeries and high-tech-scans, either, Executive Assistant Paul Blazar points to the town's premium contribution - 50 percent across the board, easily the lowest in the region.

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Health care spending only grew 3 percent in Hudson last year, with just a 2 percent rise projected. Plus, the town offers lower salaries, Blazar said, making it hard to attract and retain employees if out-of-pocket costs are added to the low premium split.

"You don't save that money out of nowhere," he said.

But while the health legislation's first year has come and gone, Widmer said cities and towns can still seek savings down the road and are likely to do so - either by again using the law, adopting it for the first time or heading straight to the negotiating table.

"Budgets are going to be tight for the foreseeable future," he said. "In a way, it's like a savings account."

(Michael Morton can be reached at 508-626-4338 or mmorton@wickedlocal.com.)